As a newcomer to the rental industry, Yoshikazu Nakanishi, who has been president and CEO of Nikken Corp. since mid-2007, already is recognizing the pressure rental companies are under to reduce prices in Japan’s competitive market and find new revenue streams.
"There are a limited number of suppliers and competition is increasing," he says. "There is a very limited future for earthmoving equipment, so we are shifting our investments." For example, half of Nikken’s budget for new equipment for 2007 was expected to be used to purchase aerial lifts.
Masayoshi Seki, Nikken’s managing director for corporate planning, says the rental market has been struggling for the last few years, but is now starting to recover. "We hope to gradually increase the rental prices," he says, adding that the Japanese rental market is transforming from the public to the private sector and that some companies are falling out of the market, leaving a more limited number of players to compete for business.
According to the latest figures available from Nikken, the company’s capital is about 1.225 billion yen ($10.85 million) with sales of 69.7 billion yen ($616.8 million).
Nikken’s core services are rental of civil engineering and construction-related products and the development, manufacture, sales and repair of the company’s own products.
Established in 1967, Nikken has an estimated 950,000 items in inventory with a variety of products including generators, vehicles, surveying instruments, high-lift vehicles, railroad construction machinery, excavators, small machines and implements, portable toilets, office supplies, lighting fixtures, machine attachments, special event items, compressors and air conditioning equipment.
In May 1996, Taro Kame, Nikken’s founder, passed away suddenly. In 2001, Mitsubishi Corp., which owned 20 percent of the company, purchased an additional 44-percent stake to become Nikken’s majority owner. Today, Mitsubishi owns 97 percent of the company.
Nikken’s revenues peaked in 1995 and 1996, followed by declines and slow growth before getting back to near peak levels in 2006 and 2007. The company touts the reliability and quality of its equipment, customer satisfaction and an ability to meet the needs of customers with large-scale construction jobs because of its available inventory as reasons for its growth in a difficult marketplace.
Coming to rental from the real estate industry, Nakanishi says there is room to grow the penetration of construction equipment rental, which is about 50 percent, not including equipment such as aerial platforms, fans or generators. Because of that, he expects the future for the rental market to be "very bright."
Nikken currently has about 2,600 employees, including more than 1,000 technicians. "We do preventative maintenance and a lot of checking of the machines," Seki says.
The same as with many Japanese rental companies, Nikken is finding a ready market for its used equipment outside of Japan. "Japanese contractors have been increasing their share of business in other areas, including Asia and the Middle East, and they buy equipment from us," Seki says.
In Japan, Nikken’s policy for purchasing new equipment is designed and then negotiated by those at the head office in Tokyo, but the final selection is left to the company’s 13 branches and 230 locations. "Each branch is quite different. We have 15 shops in Tokyo that are small and then we have a big department in the center of Tokyo with 150,000 sq. ft.," Seki says.
While Aktio Corp., Japan’s largest rental company, has grown through acquisition in recent years, Nikken is focused more on internal growth, building between 10 and 20 new branches a year.
Nikken also aims to shift its inventory to meet customer needs and has often introduced new products to the Japanese market — thanks, in part, to Americ Corp., which was established as a Nikken subsidiary in Elk Grove Village, Ill., in 1980.
Americ sells Nikken’s used equipment and has developed a range of new portable ventilators it sells to Nikken and other rental companies. However, one of the company’s main functions is to act as Nikken’s purchasing agent in the United States, looking for new products to introduce into the rental channel in Japan. Americ has imported such items as portable toilets, heaters, self-propelled boom lifts, aerial work platforms, vacuums and lighting towers that are now part of Nikken’s inventory.
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